How can contextual advertising help brands navigate the recession?

Following the events of the last couple of years, all signs point towards a likely economic downturn on the horizon and however mild we know that brands will focus their marketing budgets on partners that deliver effective outcomes.

Whilst logic suggests that brands will tighten their belts we see plenty of evidence that brands that continue to invest in a downturn come out stronger when the economy rebounds. The IAB Bellwether report shows that marketers are optimistic about the future, finding that 40% of marketers expect marketing budgets to grow in 2023.

Why keep spending?

But if consumers aren’t spending, what’s the point in advertising? Brands need to remain present in the minds of consumers, while also showing genuine concern for the needs and interests of their consumers. They need to show that they’re not fair-weather friends and ensure they’ll be front and center of consumers' minds when conditions improve and consumer spending increases.

For example, when the pandemic hit, brands were faced with a choice; curb their marketing efforts or try to continue on as normal. According to the World Economic Forum, total ad spend decreased by 10% in the US and 12% in the UK. However, those brands who continued to continue to invest smartly in their advertising, such as Nike and IKEA, were able to come out the other side of the pandemic with a positive recall with consumers.

How companies look at their marketing investments during times of economic crisis will be the difference between thriving once things return to normal or having to invest even more to regain the consumer trust that was lost. Of course, brands still need to make their investments wisely, and look into ways that offer them bang for their buck.

Building trust is key

Not all forms of advertising are created equal, and advertisers need to look into methods that offer true return on investment. This is where contextual advertising comes into play; at a time when building trust with consumers is more important than ever. Not only are consumers demanding more control and accountability when it comes to the use of their data, but establishing relationships with consumers now will bear fruit further down the road.

Despite consumers tightening their belts, the need for goods and services still remains. During this period of reduced consumer spending, the priority for brands should be holding on to market share. A study from Analytic Partners showed that a brand could lose up to 15% of its market share if a similarly sized competitor doubles its marketing investment. It’s no secret that retaining an existing customer is significantly cheaper than trying to attract new ones, which means offering ads that are relevant to the desired audience should lead to manageable sales and growth.

By continuing to invest in marketing, brands are conveying a level of reliability and comfort that is appealing to consumers. Contextual ads also offer unprecedented levels of brand safety, which allows more of a brand’s advertising to be placed on content that was previously seen as too negative or controversial to advertise on. The use of contextual AI ensures the analysis of a page is much more nuanced, opening up more opportunities for brands to reach consumers.

Win-win for all

Contextual ads are not only more likely to create a stronger connection between brands and consumers, they also give brands the opportunity to support a stronger and fairer media ecosystem. When it comes to advertising, publishers are often the forgotten party, but it’s important to recognize the positive impact high quality, non-intrusive ads can have on these players. It’s also more important than ever to invest in these publishers

Unfortunately, the latest AA/WARC Expenditure report revealed an overall decrease in online national newsbrand spend in the UK, despite an overall increase in ad expenditure. This is very concerning for publishers, as many are producing high-quality, trustworthy content in premium environments for brands to advertise in. The latest economic downturn should serve as a wake up call for publishers, forcing them to seriously reconsider their monetization approaches. Studies have shown that users would still rather consume ads than pay a subscription, which means the ads a site hosts could go a long way to determining the pleasantness of a user’s experience, and whether that user will return.

The uncertain economic landscape is forcing brands to think outside the box, especially when it comes to how and where they advertise. Going forward, contextual advertising is the best way to ensure brands not only survive a recession, but come out stronger. By continuing to advertise while doing so in a way that is respectful to consumer privacy, brands will be at the front of mind for consumers once things change for the better. By making use of the new inventory available to them, brands will also be able to support publishers, ensuring the industry comes out of the recession healthier as a whole.